The supply of agricultural land in the province of Flevoland is currently limited, while the demand is definitely there. The very high land price also makes selling land attractive in theory. Still, many of the farmers in Flevoland prefer renting out over selling. Why?
Anyone who wants to purchase land will probably not succeed in Flevoland at the moment. The offer can be called very modest. Yet there remains enough demand for agricultural land in Flevoland. According to various real estate agents, this is partly due to the large number of financially strong companies and ambitious young agricultural entrepreneurs in the region, although for many companies it remains The finance a challenge. Banks are increasingly less likely to lend money and the price of land in the province is also extremely high. A combination that makes buyers somewhat cautious.
Something that has an increasing influence on the land price (not only in the province of Flevoland, but throughout the Netherlands) is the quality of the plot. The plots where you can grow good high-net-worth crops - where irrigation is not a problem, the soil is healthy and the ground is relatively flat - will be gone in no time. The price for those lands currently amounts to €125.000 to €150.000. Striking fact: 20 years ago this was still €45.000. It is difficult to break even on less good lots, which in turn causes financing problems. It also plays a role in Flevoland that almost all land is sold to farmers in the region. The buyer therefore often knows all the 'ins and outs' of the lot.
Renting out provides a higher return
The fact that the supply of agricultural land is limited is mainly because sellers in Flevoland hold on tightly to their land. And that is not surprising, because cash currently does not yield any returns. In other words: farmers earn a lot of money in one fell swoop by selling their land. If they take that to the bank, they have to pay capital gains tax on it. Renting out the land relieves the farmer just as much and at the same time provides more returns than depositing money in the bank. In short, a logical choice.
However, this line of thought also has a downside. Not only does this keep the land price high (after all, demand is greater than supply), it sometimes also causes disagreement within the family. Because the land often ends up in the hands of the children - none of whom have taken over the company - in certain cases disagreements arise about what to do with the land. Where one wants to sell, the other wants to keep the land. In that respect, selling the land before closing down the business is more sensible, according to the real estate agents.
Waiting for a change in the land price?
Is it an option to wait for a higher or lower land price, depending on whether you are the buyer or seller? No. Brokers say that the corona crisis has virtually no effect on the price and the market is currently even described as 'reasonably balanced'. It is therefore expected that the land market in Flevoland will remain virtually the same as the current situation in the coming period. In the longer term, slightly more supply may become available, although this remains difficult to predict. After all, that has been said for years.
Regarding the land price in Flevoland. This will remain high for the time being, partly due to the fact that economies of scale will continue to be visible in this province. After all, the large farmers continue to purchase land. The land price will probably only change when interest rates rise, but there is no reason for this at the moment.